People Capital

People are the secret weapon of excellence managing. In the era when Arthur Andersen, the large international consulting firm, was recommending layoffs, people were treated as "disposable units of cost." Arthur Andersen's own extinction showed the bankruptcy of this thinking. In fact, its completely the opposite—people are the irreplaceable source of great results and a healthy organization. The last thing the effective organization would even consider when having problems is laying off its people who are the answers to all its problems.

Alfred P. Sloan, the organizing genius who created General Motors put it this way:

All organizations are fundamentally comprised of physical assets, finances, and people. Physical assets can be ordered on the phone. A call to a banker can get more money. Only in its people can an organization be unique. Therefore, the only sustainable competitive advantage lies in an organization's people.

People stuff, doing the work that makes people productive, is the hardest job there is for leaders. That's why losing organizations focus on financial issues and renovating the lobby—they do easy tasks rather than tackle the most important issue. The effective leader acts differently—building a great organization requires focusing on finding ways to release the hidden greatness that exists in all people.

While its true that managing people well makes sense since they are the biggest single expense in the organization's budget, that misses the mark entirely. In an innovation culture where people are sparking and enthusiastically contributing the evidence is that the return on investment (ROI) from payroll exceeds its cost! In other words, people don't cost you money, they make you money. And in a Gold Standard culture, all the fun it spins off is just extra gravy on the gravy train.

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